There is an enormous new revenue opportunity for CEOs of asset-intensive industries to extend the value of existing products by unlocking and monetizing the data they create.
Got your attention?
Consider this example: An elevator company packages and sells the data it collects to landlords. An elevator company? Collecting data? Selling it? Talk about thinking outside the box! (Sorry, couldn’t resist.)
Think about it. The elevator company tracks how many people access each company on every floor in the office buildings it services. Once it pairs that information with publicly available financial data for those companies, the elevator company can then advise landlords on which companies will likely require additional floor space due to growth. On the flip side, the elevator company can alert the landlord about declining traffic to a particular office. If that information correlates with a decline in financial performance for that firm, it provides a warning signal that the tenant might be at risk of defaulting on or not renewing their lease. Insight like this is worth a lot of money to landlords.
How did the elevator company come up with the idea for this new product based on an existing asset? It wasn’t a spontaneous “aha” moment. It was the result of focused innovation.
Enter the chief data officer (CDO). The CDO’s job is to find new digital revenue from existing physical assets. The CDO guides the organization from not knowing what they don’t know about the data locked in their assets to actually doing something about what they know.
And I already know what you’re thinking. Another “chief of this and that?” Another title du jour that CEOs are expected to fund? Actually, no, not this time.
The CDO is actually best placed in direct support of executives already responsible for product development. That way, the CDO’s focus is locked squarely onto a specific asset or product. The CDO can unlock the value of data or information from the product or information that is related or valuable to the product. The CDO should also collaborate with peers throughout the organization to help the existing product development teams do what they do best: develop products.
Contrast this to the predicament that a shiny new CDO would encounter if reporting to the CEO: a hostile C-suite of peers resentful at the prospect of losing another source of innovation and revenue to the new-fangled title on the other side of the boardroom table. This all-too-often spells trouble, heartache and, frankly, disaster.
We advise CEOs to empower existing product leadership teams with focused talent that can find new sources of revenue from their assets, rather than set up another isolated C-level player who may fail in a power struggle for access to data.
Even though we recommend that CDOs, in most situations, should reside within the business units, CEOs must be actively involved in developing the priorities and objectives of the role. The CEO is ultimately responsible for the digital strategy of the organization and responsible for unlocking the corporate value of information in the organization. The CEO must own and drive the digitalization of the organization.
All this begs the obvious question from the CEO: I thought we were supposed to hire a chief digital officer? Is this some kind of CDO-bake-off? I’ll explore this in my next post.
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